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>> david, i love it in your book come back america, you refer to washington as "the lala land of the east." you say they are not living in a real world. talk a little bit about how you perceive washington. >> ronald reagan talked about washington as being an island surrounded by a sea of reality. he is right. the so-called washington beltway. for the record, i live outside the beltway on land that george washington used to own. basically what we have now is a predominance of career politicians, people who may or
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may not have spent much time in the real world before they entered politics. then they come to washington, which is definitely not the real world, and are out of touch with reality. i think there is a growing disconnect between those who are our elected representatives and those who they represent. >> let me go in this direction because there is something in the book that i found very humorous, and i think it is jefferson who talked about congress being made up of lawyers. as i recall, 56% of people in the senate are lawyers, 36% or 37% in the house. is that a good thing or a bad thing? >> some people have argued that if we exported half of our lawyers, we would not only help the economy but the balance of trade because we would be better off and the other side would be worse off. there are good lawyers, but the factor of the matter is we need a better cross-section of
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america. >> people who have been in the trenches to know how to run a business. >> the thought it during -- the founding fathers were honest people to come out of the real world, do short-term public service, and go back into the real world. that way you understood more about the world and you were part of the world and you did not grow disconnected. >> how much of a financial mess are we in in this country? try to keep the numbers so that i can understand them. >> i will do my best. obviously we have huge deficits, and from last year it was $1.42 trillion. the president estimates for 2010 the deficit will be $1.6 trillion, $1.3 trillion next year. if you think those numbers are big, the real problem is that we have unfunded obligations for medicare and social security that are multiple times greater. our financial hole is over 60
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$60llion dollars -- over si trillion and growing. >> so there is a deficit number and a debt number, am i right? >> yes, the deficit is a one- year number, the debt is a cumulative number. there are things that are not dead but on our current path they will be because we do not know how we will find them. >> today we opened "the new york times." is right on the front page. the president has submitted his budget for 2011. how much did he submit? >> $3.8 trillion in spending. >> ok, in spending. how much are we going to collect in revenues and taxes? >> $2.5 trillion, for a gap of $1.3 trillion. so we will have to borrow more than 1/3 of every dollar that we
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spend. there iso right there b a deficit. a pretty big number. so you get a budget and i gather 60% of it is called mandatory spending? >> right, autopilot. >> tell us what that is. >> unless the congress changes the law, you have to pay whatever the bills are for those programs. weather is per month under social security, for providers providing services like medicare and medicaid. right now over 60% of the budget is mandatory on autopilot. here is where it gets interesting. the less than 40% that is not on autopilot that congress has control over includes the expressly enumerated responsibilities the founders assigned to the government. that is what is getting squeezed. >> of the 40%, half goes to the
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defense budget? >> that is correct. >> so there is not a heck of a lot of money to play around with, about 20%. >> that is correct. in fact, the president has proposed, due to a three-year freeze, somewhat less than 20%. while a positive step, that will not have a significant impact on our deficit. we will have to make more tough choices. >> i am one of the many people, the 300-plus million people in this country, and there is no question that people are angry, right? and get hold of today's economy and get it into this deficit and these debts, huh? >> people care about two things -- number 1, the economy and jobs. it is understandable that is number one. number two, escalating deficits
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and debt. which means the president has to be able to do two things. he has to take steps to try to stimulate the economy, to try to get unemployment down, and he has to put a process in place that will enable us to address the large known growing structural deficits that will be there even when we are at peace, even when the economy is growing, and when unemployment is down. >> we will take a little break and tell the folks at home, david walker is our guest. he has written this terrific book, "come back, america: turning the country around and restoring fiscal responsibility." his credentials are absolutely amazing. former ceo of the -- he changed the name -- the u.s. general accountability office. he is president and ceo of the peter g. peterson foundation,
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and also this "come back, america." lots to talk about. we will take a little break. "this is america." >> "this is america" is made possible by hyundai motor the national education association, the nation's largest advocate for children and public education. the league of arab states, representing 350 million people in 22 member countries. the road and borrow family trust. the ctc foundation, and the
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american life tv network. i should ask you, peter g. peterson -- who is that and what is that all about? >> he is a first generation american, a case study in the american dream come true. his parents came here from greece. they went to nebraska, they put him through the best schools in the country. he has been a cabinet secretary, a ceo of several enterprises, is now a billionaire because he was one of the founders of the blackstone group that went public. and he is putting his money where his mouth is and this time where his heart lies by creating the peter g. peterson condition to fight for america's future. >> what would you say is the mission of the foundation, and your mission as well? >> it is to promote federal financial responsibility, to promote more responsibility and accountability to date to create more opportunity tomorrow. >> you say that the financial
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picture of the united states is, humorously, not in need of a net and a top but in need of major reconstructive surgery. i want to walk through three major items -- social security, taxes, and also health care, because those are the biggies. going backwards, lincoln taxed people, did he, to support the civil war? >> he did, and then we came out of the tax. then in 1913 we got the moderate income tax, and the federal reserve. >> so 1913 is taxes, 1935 social security, 1965, under johnson, was health care, medicare and medicaid. if you go back and look at social security, if i read things correctly, 35% of the people who retire live on social security, is that correct? >> primarily.
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22% of americans rely on social security is exclusively. it was never intended to be that way, but that is the way it is. >> a chapter in the book, "save social security." how are you going to save it? you have the obligation to pay folks for several years to come. >> you can miss a layout and basketball, but it is a pretty high-percentage shot. we can exceed the expectation for every generation of americans, and here is how. for people after retirement, you will make little or no changes because they do not have time to make adjustments. the younger you are, the better off you are financially, the more you are going to be affected. we will gradually increase the normal and early retirement age and index of life expectancy gradually. we will strengthen the benefit for people at the poverty level, provide somewhat less of a replacement for middle and upper income but not turn it into a
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totally means-tested program. you can solve the raising of taxes. if you end up taxing the wage- based gap, everybody gets more than they think they are going to get, not more than they had been promised but more than they think they are going to get. on top, left at an automatic savings account -- let's add an automatic savings account. that would be progress on multiple fronts. >> a lot of folks -- we have a bad savings rate in america. traditionally, and we are a consumer-driven society. we buy things. but like the $4 gasoline, this deficit business has caused people to all of a sudden say, whoa, this party is not going to last forever. so the saving rates are going up
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a little bit. >> they are. people are scared, concerned. they have started moderating spending, moderate they're taking on debt. they are starting to save more. it is a lot better from 0 to negative, which is where we were for a long period of time. >> this may apply to a lot of folks working in the television facility here. that is maybe the 2% or 3% of their checks to go into an automatic savings account. a lot of people say i am living paycheck to paycheck as it is, but 2% or 3% might not be a bad idea. >> it is not a lot of money when you never touch the money. my mother taught me a lot of great things. she said once you touch the money, you will spend the money. in america they spend it multiple times. it 2% or 3% comes right off the
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top, going into a trust fund with real investments, not one of these trust-the-government funds, that way people can have something for retirement. they can also understand the miracle of compounding and have an investment in america's future as well as their own future. >> so you are saying the social security benefits will be there, but you also put on the table that probably imperceptibly where nobody is working, -- where nobody is looking, because that is the way it will have to happen, but if you change the age at which people collect the social security, is not all hell going to break loose? >> we need to do it for several reasons, not just fiscal reasons we need to do it for workforce reasons. we are starting to experience slower work force growth. we are in a service-based economy, not the industrial age. it is brain power rather than
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broad power that drives our economy. we need to encourage people to work longer to fuel economic growth. they will have an ability to work longer because of the nature of what work is. plus, people are living longer and staying healthier longer. for all those reasons and more, we need to do that. >> let's talk a little bit about health care. you say it costs too much and it is not up to standard. you can compare that with other countries around the world. this was a statistic in the book i thought was fascinating, that 27% of the people are either on medicare, medicaid, or some kind of military health program. that is a lot of people, almost 30%. talk a little bit about your wife, mary, who had an auto accident, and what happened as far as trying to get her well
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and tested and such. >> the more they get paid, it is less likely you will get sued because -- and the more you do, the less likely you will get sued because of all that you did. >> $20,000 worth of tests? >> and they never found out what caused her to faint. i went to her in one of the last appointment and said, "dr., why are you recommending that for these things to be done?" and he said, "it is the only other thing i can think of." i said, ", it is it going to cost," and he said, "i do not know, and you should not care because insurance will cover it." >> and that is the problem, isn't it? a lot of people -- well, let's not go down that avenue quite yet. do we have to change that c-for-
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services business? >> absolutely. >> we are thhow will that change things? a check?it just >> we write a blank check. >> $20,000, focus on the $20,000? if he had stopped at $10,000 worth of tests? >> he could have said let's look at the evidence, and what does the evidence say is more likely to be predictive or not? let's do the things that are likely to be the most beneficial, the most value for the money. that is with regard to public resources. you and i and our employers ought to be able to spend whatever they want. but there is a difference between us spending our own money either directly or through compensation and how much the taxpayers are going to spend when there is a limited amount of taxpayer funds. >> so you are saying what we
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should guarantee under these plans are what is basic and what is essential. ambac and i argue that we ought to have a universal health brigitte >> and i argue that we ought to have universal health care in this country, but we need to look at what is affordable and sustainable. >> why does that cause so much trouble? >> because people would rather have everything to that and not pay for it tomorrow or ever, and the system does not work that way. public a winmpy policy. i would rather pay you tuesday without a tax crees to pay for it today brigitte without a tax increase to pay for it today. >> the people voted that they would spend more money in taxes, that they would be ok with that. >> right, but frankly, there
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aren't twa assistance in this country where we spend double person and we get below average results. those are health care and k-12 education. the problem is not whether or not we are spending enough money. we are spending twice as much as any other industrialized nation or person. the system is badly broken. if anything, our kids need to be in school longer, and instructed differently. we ought to have pay for performance. >> let's talk a little bit about taxes. as i recall, 40% of the people did not pay any taxes at all? >> over 40%. they do not pay any income taxes. -- any payroll taxes. they do pay income taxes. they do not pay income taxes, they found a constitutional roles of the federal government. those payroll taxes are not
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adequate to fund the programs that -- >> let me grab another statistic. 69% of the people are paying in their payroll taxes and income taxes, paying more, almost that they are taking home. i am off on that one. >> more people pay -- most americans pay more in payroll taxes than they do in income taxes, and the total tax burden is shared by a fairly small percentage of americans. we really do have a protes progressive tax structure. here is the other issue -- we are not generating enough revenue to pay our bills now. >> well, that is what we started off by saying. >> and is going to get worse. we have to figure out what should the government be doing, how do we do it, how do we measure success, and how are we
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going to finance it? we have to reconcile what people want with how we can afford it. >> i do not want to play politics, but were the bush tax cuts a good idea? he rides in and there is a little bit of a surplus from clinton. congress is supposed to be the people in to fiscal responsibility. what went wrong there? >> there is no party of fiscal responsibility. >> but that is what they say. >> as has been said, actions speak louder than words. >> so you want to make the tax system simpler and fairer because you have all these people at the top. but obama says we are going to give you more programs but tax the rich, so that is not a fair thing. >> there is a new water-letter word in washington, and that word is "math." we are not top 100 in high
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school in math in the country or in washington. president obama should never have made the promise to tax only people over to madrid $50,000. bush promised a middle class at -- to tax only people over $250,000. bush promised a middle-class tax cut. spending is out of control. >> your father, grandfather -- let's say there is a child, 10 years old. it is 2010, so 2030 he will be 30 years old. ambac that is right, 20 plus 10 is 30 -- >> that is right, 20 plus 10 is 30. >> 30 years old. what is his tax burden going to be, or her tax burden going to be, at that point if we continue
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to spend in this reckless manner that we are spending? >> between 23 and 24, the federal tax burden alone will double. -- between 2030 and 2040, the federal tax burden alone will double. here is the problem, we will never be there. our foreign lenders will never lend us the amount of money we will have to borrow at reasonable interest rates. my view is we have less than five years to be able to demonstrate that we are going to get serious. i actually believe less than two, to demonstrate that we will take steps to put our financial situation in order, otherwise we will have a crisis. >> what is the biggest lesson you have learned? >> everybody wants whatever they want today, but they do not want to have to pay for it tomorrow. we have a societal problem. starting in the early 1970's -- the late 1970's, early in the
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past, americans became addicted to debt. now americans know that "too big to fail " is a false premise. but our politicians do not want to make tough choices. we cannot afford to wait for a crisis here because it would be mighty ugly for america and for americans. >> "come back, america: turning the country around and restoring fiscal responsibility ." there are three things that jump out at me. you need a plan. you have to get the citizens involved. and you are even toying around with the idea of calling some kind of constitutional convention. put all those things together and talk about that for a little bit. why is the plan necessary and how will you get people involved? >> you have to have two things
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-- good ideas from a policy standpoint, and processes that will give a chance for the good ideas to become a reality. on the fiscal front, the president has called for looking at statutory budget controls, health care, tax reform. >> bipartisan -- >> we need non-partisans solutions that achieve bipartisan support. secondly, then we have to look at it base lending -- baselin ing government. we have to have a special process for that. thirdly, we have a dysfunctional democracy. we have a republic that is not representative of the public. we will have to make reforms in our redistricting system, our campaign finance laws, and possibly consider term limits. and we may have to have a constitutional convention in less we can get the congress
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region unless we can get the congress to -- unless we can get the congress to enact one. >> "come back, america." are optimistic? >> i am an american. we are at -- >> we are a little bit in hock to china, and our standing in the world -- if they get angry with us, we do not have the leverage we used to have, do we? >> american taxpayers now have guaranteed $five trillion in fannie mae and freddie mac debt because those countries and foreign investors demand it. >> "come back, america. david m. walker. you can get in touch with folks at the peter g. peterson foundation. >> great to be with you, dennis.
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>> for online video of all "this is america" programs, visit our website, thisisn'tamerica -- net. "this is america" is brought to you by hyundai motor america. the national education association, the nation paused largest advocate for children and public education. the -- the nation's largest advocate for children and public education. the league of arab states, representing 350 million people in 22 member countries. ndaro family trust, the ctc foundation, and the american life tv network.
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This Is America With Dennis Wholey
WHUT March 13, 2011 9:00am-9:30am EDT

News/Business. (2010) CEO David M. Walker, the Peter G. Peterson Foundation. (CC)

TOPIC FREQUENCY Washington 7, Peter G. Peterson 4, The Nation 3, Ambac 2, Johnson 1, Obama 1, Twa 1, Hyundai Motor America 1, The National Education Association 1, National Education Association 1, Blackstone 1, Ctc Foundation 1, Hyundai 1, The Economy 1, The Ctc Foundation 1, Mary 1, Lincoln 1, David Walker 1, Humorously 1, New York 1
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